Condo Conversions on the Horizon in Seattle

As reported by PSBJ, commercial real estate brokerage Marcus and Millichap issued their 2014 Apartment Report last month where they indicated that apartment developers will begin chewing over the possibility of turning apartment buildings into condominiums. (Photo of Residences on 5th, a condo conversion completed in 2007).

Overall, the report shows the rental market in favorable light in Seattle. But because Seattle has so many apartment units being delivered to the market (8,000 units in 2013 and an estimated 8,100 in 2014), they did move Seattle down to the 7th strongest apartment market in the country from its position at 5th strongest last year.

Even though there appears to be a glut in apartment building construction, the report seems to think we will remain stable due to job growth that should support demand. Another factor that will temper the supply will be developers who will convert rentals into condos. Since the supply of condo units is extremely low this makes conversion attractive to developers.

In summary, the report states that Seattle had a large number of apartment units delivered in 2013 with more coming in 2014, which will push the vacancy rate up slightly but with good job growth and likely condo conversions that vacancy rate will go back down in 2015.